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The €10bn Cypriot rescue marks a watershed in how the eurozone deals with failing banks, with European leaders now committed to “pushing back the risks” of paying for bank bailouts from taxpayers to private investors, the chairman of the group of eurozone finance ministers has warned.
Jeroen Dijsselbloem, the president of the eurogroup, said the relative market calm in recent months, coupled with the lack of market panic following the decision to force private investors and depositors to pay for the entire bailout of two large Cypriot banks, allowed the eurozone to go after private money more aggressively when banks fail.
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“Taking away the risk from the financial sector and taking it on to the public shoulders is not the right approach,” Mr Dijsselbloem, who is also the Dutch finance minister, said in an interview with the Financial Times and Reuters hours after he finalised the controversial Cypriot programme.